Monthly Archives: March 2010

Under Dems, we’ve established that off[s]hore drilling is OK. Nuke subsidies are OK. Coal subsidies are OK. As yet, gotten NOTHING in exchange.

I suppose after the health care victory we have to give Obama the benefit of the doubt that he can still get climate legislation through congress. But from the cheap seats out here in Seattle, it sure looks like he gave the GOP everything they wanted on energy, with out them giving him a single thing in return.

The Biden trip to Israel we mentioned on this week’s podcast wasn’t the only interesting Israel-related news this week. Gen. David Petraeus made a splash with the military brass and the White House by telling them that the Palestinian conflict was undermining the American mission in the Middle East.

Podcast listeners know we’ve been harping on inflation lately, arguing that given America’s current budget deficit and liquidity trap, significant inflation is the most inevitable path out of this recession. Paul Krugman, in a column on China’s currency manipulation, agrees:

It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings. In short, right now America has China over a barrel, not the other way around.

Couple this with the news that the International Monetary Fund is talking about increasing inflation targets from 2% to 4%, and you can see an elite consensus emerging around the idea of higher inflation.

None of this is to argue that inflation is a “good” thing. Runaway inflation can certainly be bad for an economy. Just ask Zimbabwe or 1930s Germany. On the other hand, moderate inflation is good for debtors, such as, say, the US Government or the 1 in 4 homeowners who are underwater on their mortgages.